When MySpace flips the switch on its long-awaited music service next month, advertising-supported free streaming is expected to play a big role.
But the social networking bellwether will launch during an economic slowdown, joining an existing ad-supported music market marked by declining advertising growth rates that have affected even such Internet giants as Google and Yahoo. In this kind of climate, how can startups like imeem, Last.fm or MySpace Music expect to survive?
While they still face hurdles in attracting big-ticket advertising campaigns, imeem Chief Marketing Officer Steve Jang says they're doing just fine.
"We're somewhat insulated from the overall macro downturn that's happening," he says.
Jang specifically points to data that shows spending on multimedia ads-the kind most relied on by ad-supported music services-continues to enjoy robust growth.
After search advertising, display ads have traditionally captured the bulk of Internet ad spends, with $4.4 billion in the United States last year, according to eMarketer. However, display ads are expected to grow only modestly during the next four years, barely doubling to $9.3 billion by 2012. Meanwhile, rich-media ads, which include audio and video, will more than quadruple in that time and ultimately surpass display totals, from just $2 billion last year to almost $9.5 billion by 2012.
These are the kinds of ads that online music services are courting. For instance...
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